Press Release

Company Continues to Take Steps During Restructuring to Build for Future Growth

BELGRADE, Mont., Aug. 09, 2017 (GLOBE NEWSWIRE) -- Xtant™ Medical Holdings, Inc. (NYSE American:XTNT), a leader in the development of regenerative medicine products and medical devices, today reported its financial results for the quarter ended June 30th, 2017. The Company reported Second Quarter 2017 revenue of approximately $21.4 million and an EBITDA loss of approximately ($2.1) million for the period.

RevenueConsolidated second quarter 2017 revenue was approximately $21.4 million, a slight decrease compared to revenue of approximately $21.5 million for the same period of 2016. The slight decrease was due to a 20.5% increase in biologic revenue offset by an 18.4% decrease in fixation revenue compared to second quarter 2016 revenue.

Gross ProfitConsolidated gross profit for the second quarter of 2017 was $13.5 million or 63.2% of revenues, compared to gross profit of $14.7 million or 68.5% of revenues for the first quarter of 2016. The decrease in gross margin was primarily due to lower fixation revenue and lower fixation product margin compared to prior periods. In addition, the Company recorded a charge of approximately $304,000 for excessive wear and tear on fixation instruments and $159,000 for discarded biologics inventory about to expire.

Sales and Marketing ExpensesConsolidated second quarter 2017 sales and marketing expenses increased to $11.1 million, compared to sales and marketing expenses of $10.4 million during the same period in 2016. For the quarter, sales and marketing as a percentage of revenues increased to 52.0% compared to 48.6% in the second quarter of 2016. The increase was primarily driven by increased commissions from revenue derived from distributors who have higher contracted commissions rates.

General and Administrative ExpensesIn the second quarter of 2017, consolidated general and administrative expenses increased to $4.5 million, compared to general and administrative expenses of $3.9 million for the same period during the prior year. As a percentage of revenues, general and administrative expenses were 21.1% during the period, compared to 18.2% for the same period of 2016. The increase was primarily due to increased professional fees and a $214,000 charge for contributions to employee benefit plans. In addition, the Company incurred additional insurance expense of $142,000 compared to the second quarter of 2016.

Net Income / LossSecond quarter 2017 consolidated net loss increased to ($9.7) million, compared to a net loss of ($4.5) million reported during the year-ago period. Second quarter 2017 consolidated loss per share was ($0.54), compared to a loss per share of ($0.37) in the second quarter of 2016. The second quarter 2017 net loss includes approximately $1.5 million included in Other Expense for professional fees incurred in connection with the Company's potential restructuring and approximately $3.3 million of Interest Expense on the Company's debt instruments.

EBITDAThe Company defines earnings before interest, taxes, depreciation and amortization ("EBITDA") as net income/loss from operations before depreciation, amortization, impairment charges, non-recurring expenses and non-cash stock-based compensation. Consolidated EBITDA for the second quarter of 2017 was a loss of approximately ($2.1) million compared to a gain of $253,000 for the same period during 2016 due largely to the decrease in gross profit and increase in sales and marketing expenses noted above.

Financial LiquidityCash on hand as of June 30, 2017, was $1.7 million, as compared to $2.6 million as of December 31, 2016. Net working capital as of June 30, 2017, decreased to $17.9 million, as compared to $21.6 million as of December 31, 2016.

Conference Call to be Held August 10, 2017

An accompanying listen-only conference call will be hosted by Carl O'Connell, Chief Executive Officer, and John Gandolfo, Chief Financial Officer, to discuss the results. The call will be held at 10:00 AM ET, on August 10, 2017. Please refer to the information below for conference call dial-in information and webcast registration.

Following the live call, a replay will be available on the Company's website, www.xtantmedical.com, under "Investor Info."

About Xtant™ Medical Holdings, Inc.

Xtant Medical Holdings, Inc. (NYSE MKT:XTNT) develops, manufactures and markets class-leading regenerative medicine products and medical devices for domestic and international markets. Xtant products serve the specialized needs of orthopedic and neurological surgeons, including orthobiologics for the promotion of bone healing, implants and instrumentation for the treatment of spinal disease, tissue grafts for the treatment of orthopedic disorders, and biologics to promote healing following cranial, and foot and ankle surgeries. With core competencies in both biologic and non-biologic surgical technologies, Xtant can leverage its resources to successfully compete in global neurological and orthopedic surgery markets. For further information, please visit www.xtantmedical.com.

Important Cautions Regarding Forward-looking Statements

This press release contains certain disclosures that may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "continue," "efforts," "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "strategy," "will," "goal," "target," "prospects," "potential," "optimistic," "confident," "likely," "probable" or similar expressions or the negative thereof. Statements of historical fact also may be deemed to be forward-looking statements. We caution that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: the ability to comply with covenants in the Company’s senior credit facility and to make deferred interest payments; the ability to maintain sufficient liquidity to fund operations; the ability to remain listed on the NYSE MKT; the ability to obtain financing on reasonable terms; the ability to increase revenue; the ability to continue as a going concern; the ability to maintain sufficient liquidity to fund operations; the ability to achieve expected results; the ability to remain competitive; government regulations; the ability to innovate and develop new products; the ability to obtain donor cadavers for products; the ability to engage and retain qualified technical personnel and members of the Company’s management team; the availability of Company facilities; government and third-party coverage and reimbursement for Company products; the ability to obtain regulatory approvals; the ability to successfully integrate recent and future business combinations or acquisitions; the ability to use net operating loss carry-forwards to offset future taxable income; the ability to deduct all or a portion of the interest payments on the notes for U.S. federal income tax purposes; the ability to service Company debt; product liability claims and other litigation to which we may be subjected; product recalls and defects; timing and results of clinical studies; the ability to obtain and protect Company intellectual property and proprietary rights; infringement and ownership of intellectual property; the ability to remain accredited with the American Association of Tissue Banks; influence by Company management; the ability to pay dividends; and the ability to issue preferred stock; and other factors.

Additional risk factors are listed in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors." The Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.